Extracting dollars

YOU have no doubt heard of ‘overheating’, the word used in economic language to describe an economy that is growing, but at the same time, seeing rising inflation. This combination of growth with inflation portends trouble because it is a sign that the economy is trying to serve levels of demand that its productive apparatus is not capable of meeting. Over-extraction is something similar, but on the opposite end of the spectrum. This is when a state tries to extract for itself resources from an economy that the productive apparatus is not able to supply. And that is where we have reached in Pakistan. We are now in a situation where the state is trying to extract dollars and revenues from an economy in quantities that the productive apparatus cannot supply.